D-A184 288 ELECTRONIC BULLETIN BOARDS FOR CONTRACTING(U) ARMY /iPROCUREMENT RESEARCH OFFICE FORT LEE VA J1 PAINTERJUN 87 APRO-87-86/

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ARMY. PROCUREMENT RESEARCH OFFICEOFFICE OF THE ASSISTANT SECRETARY OF THE ARMY

(RESEARCH, DEVELOPMENT AND ACQUISITION)

FORT LEE. VIRGNI 23801-8045

828 Z5184

DISTRIBUTION:

Deputy Under Secretary of Defense (Acquisition Mgmt)Assistant Secretary of the Army (RD&A), ATTN: Deputy for Acquisition PolicyOffice of Federal Procurement PolicyDefense Systems Management College, ATTN: Director, Acquisition Research (6)Cdr, USA Materiel Command, ATTN: AMCPP-SP (JO)Cdr, USA Materiel Command, ATTN: AMCDE-Q (10)

4 Administrator, Defense Technical Information Center, ATTN: DTIC-TCA (5)Office of Naval ResearchAssistant Secretary of the Army, ATTN: SARD-ZAPentagon LibraryFederal Acquisition InstituteLogistics Mannagement InstituteDepartment of EnergyCdr, US Army Armament Munitions & Chemical Command, ATTN: AMSMC-PP (5)Cdr, US Army Management Engineering Training ActivityCdr, US Army Armament Munitions & Chemical Command, ATTN: AMSMC-PC(A) (2)Cdr, US Army Electronics R&D Command, ATTN: AMDEL-AQ (3)Cdr, US Army Test & Evaluation Command, ATTN: AMSTE-PR (6)Cdr, US Army Aviation Systems Command, ATTN: AMSAV-PRC (5)Cdr, US Army Communications-Electronics Command, ATTN: AMSEL-PC-SP-P (3)Cdr, US Army Communications-Electronic Command, ATTN: AMSEL-PC-D (3)Cdr, US Army Armament Munitions & Chemical Command, ATTN: AMSMC-PCC(D) (5)Cdr, US Army Electronics R&D Command, ATTN: AMDEL-AQ-MInventory Research OfficeCdr, US Army Depot Systems Command, ATTN: AMSDS-K (2)Cdr, US Army Tank-Automotive Command, ATTN: AMSTA-IPB (5)Cdr, US Army Missile Command, ATTN: AMSMI-IBA (5)Cdr, US Army Troop Support Command, ATTN: AMSTR-PYC (5)LTC R. J. Hamptom, Chief, Contracts Support DivisionAir Force Contract Management Division, ATTN: AFCMD/XQSOffice of the Project Manager for Training Devices, ATTN: AMCPM-TND-PP (2)Defense Logistics Agency, ATTN: DLA-LO-DORANASA Ames Research CenLer, Procurement DivisionCost & Economic Analysis CenterDefense Logistics Studies Information ExchangeSchool of Acquisition Management (2)Director, Federal Acquisition Institute, General Services AdministrationLibrary, GSAMrs. Lisa Davis, Deputy Director of Acquisition Management, ASN (R,E&S)Mr. Steve N. Slavsky, OASD(A&L) CPACdr, US Army Materiel Command, ATTN: AMCDMRCdr, US Army Materiel Command, ATTN: AMCDRACdr, US Army Materiel Command, ATTN: AMXIGCdr, US Army Materiel Command, ATTN: AMCDMA (2)

APRO 87-06FINAL

ELECTRONIC BULLETIN BOARDS FOR CONTRACTING

by

CPT JOHNATHAN PAINTER

JUNE 1987

Information and data contained in this document are based on input availableat the time of preparation. This document represents the view of the authorand should not be construed to represent the official position of the UnitedStates Army.

The pronouns "he", "his", and "him", when used in this publication, representboth the masculine and feminine genders unless otherwise specifically stated.

Approved for Public Release, Distribution Unlimited

OFFICE OF THE ASSISTANT SECRETARYUS ARMY PROCUREMENT RESEARCH OFFICE

Fort Lee, Virginia 23801-6045

EXECUTIVE SUMMARY

A. BACKGROUND. Automation technology offers an opportunity to improve theflow of information between the government and its contractors.

Mr. Vorhies (E-Systems, Inc.) has suggested the use of electronictelecommunication services as a means of improving the flow of informationduring the procurement process. This study evaluates that suggestion.

B. STUDY OBJECTIVES. The study objectives are:

1. Determine if it is feasible to develop and employ these telecommunica-tion services in the initial procurement process.

2. Determine if it would be useful to use these services within theprocurement process.

3. If appropriate, make recommendations on possible future testing.

C. STUDY APPROACH.

1. Evaluate the availability of present day telecommunication servicesand determine if these services could be provided to the US Army procurementcommunity.

2. Examine the present methodology/standard operating procedures in theprocurement process and determine which areas are best suited for theseservices.

3. Examine presently employed "automated" procurement systems anddetermine their acceptability.

D. SUMMARY AND CONCLUSIONS. The automated procurement systems in use atdifferent offices throughout the different services (with more being addeddaily) indicate an acceptance of this type of service. The concept isfeasible and worthy of testing.

E. RECOMMENDATIONS.

1. That these telecommunication services be tested for use with govern-ment procurements.

2. That the actual test be conducted by one of the more "automated"buying commands.

3. That the test involve at least three procurements, one in each of the :]following areas: (1) hardware, (2) service, and (3) research and development ]and that it start prior to the development of the draft request for proposal.

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TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY............................................... ii

LIST OF FIGURES................................................. v

CHAPTER

*I. INTRODUCTION ................................................... 1IA. Background..................................................1IB. Study Objective............................................. 4C. Stud 'y Approach.............................................. 4D. Organization................................................ 5

II. DEVELOPMENT OF SCOPE............................................ 6A. Overview ................................................... 6B. Current Procurement Procedures............................... 6C. Summary .................................................... 8

III. DISCUSSION OF CURRENT ELECTRONIC COMMUNICATION PROCESSES ANDAUTOMATED CONTRACTING APPLICATION................................ 9A. Introduction.............................................. 9B. Systems Presently in Use ....... ............. 9

1. Paperless Ordering Placement System :::::.................2. Procurement by Data-Link Quotation System ................. 103. Commerce Business Daily on Electronic Bulletin Board ....... 10

C. Systems in the Developmental Stage........................... 101. Computer Aided Logistics Support .112. Standard Army Automated Contracting Sien::.....113. Integrated Procurement System............................ 11

D. Summary.................................................... 12

IV. ANALYSIS OF CONCEPT ............................................ 13A. Introduction ............................................... 13B. Concept of Suggestion....................................... 13C. Analysis of Suggestion...................................... 13D. Analysis of Issues.......................................... 16

1. Technological........................................... 162. Contractual/Legal....................................... 173. Managerial ............................................. 174. Security ............................................... 175. Economic ............................................... 18

*E. Effects on Small Business ................................... 19F. Summary.................................................... 19

iii

V. ALTERNATIVES................................................... 20A. Introduction ............................................... 20B. Alternatives ............................................... 21

1. Alternative I (Status Quo) ................. 212. Alternative II (Use All In-House (DOD) Resources]......23. Alternative III (Use All Commercial (Private Companies).2

Resources] ............................................. 224. Alternative IV (Use Part In-House and Part Commercial

Resources) ............................................. 22C. Analysis................................................... 22D. Testing.................................................... 24

VI. CONCLUSIONS, RECOMMENDATIONS AND IMPLEMENTATION PROCEDURES ........ 25A. Introduction ............................................... 25B. Study Conclusions ...................... 25C. Recommendations and ImlmnainPoeurs......... 26D. Summary.................................................... 21

REFERENCES..................................................... 28

iv

LIST OF FIGURES

FIGURE PAGE

1. Total U.S. Army Procurement Actions ................................... 2

2. Total U. S. Army Procurement Dollars .................................. 2

. V

CHAPTER I

INTRODUCTION

A. BACKGROUND.

Timely, free flow of information between buyer and seller has historically

been a problem in government procurement actions. Since there is the

requirement to make information available to an individual, a group within a

single location or a group across the nation, in a timely manner, it is very

important that the government consider taking advantage of the latest

communication technology. Present day communication technology will allow the

user to gain better and faster access to expertise and work closely with

distant associates while spending less time and money on travel.

Figures 1 and 2 illustrate how the total procurement actions accomplished

and the total dollar value of these actions have continued to increase within

the U.S. Army over the past ten years. By using these ten years of

historical data and simple linear regression it is projected that there will

be approximately 6.5 million procurement actions in 1995. If only the most

recent five years of data are used, a more conservative estimate of 5.5

million action will be forecasted for 1995. This steady increase in the total

procurement workload over the past ten years and the projected increase in the

future indicates a need to streamline all possible areas in the initial

procurement process and insure fast, efficient and meaningful dialogue between

the government and supplier.

In a recent Army Competition Conference (26 June 1986), the need for

incorporating present day electronic telecommunication technology into the

procurement process was highlighted. One of the panel members (Mr. H. W.

Vorhies of E-Systems, Inc.) presented a paper suggesting the use of electronic

bulletin boards (EBB), electronic mail service (EMS) and on-line terminal

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conferencing as a means of upgrading the flow of information between the

Government and the contractors. All three of these are electronic

telecommunication services that allow the users to have immediate access to

information. The EBB allows information to be "posted" electronically by the

providing office/activity and accessed by the user. This information can be

copied and printed out at the user's office for later use. The EMS allows

information to be sent from one office to one or more different offices. This

is an interactive service where information can be copied, updated and sent to

more offices as needed. The on-line terminal conferencing is the same as the

EMS except that it also allows the users to hold meetings, with all or only

some of the users, and discuss ongoing projects or procurements. The

following are the main ideas taken from Mr. Vorhies' paper.[1]

1. Establish an EBB to allow equal and faster access to contractual

information for all potential contractors.

2. Establish EMS between bidder and contracting officer to allow faster

two-way communications.

3. Establish private on-line terminal conferencing among Army procurement

players [i.e., Project Manager (P.M.) contracting officer, contracting

officer's technical representative, TRADOC system manager, DA system

coordinator and the Competition Advocate] to allow them to keep abreast of

ongoing procurement actions.

4. Provide the Request for Proposal (RFP) in summary or full text (when

possible) to potential contractors by EBB and EMS.

5. Provide pre-bid information to potential contractor by EBB and EMS.

6. Allow questions and answers between contractors and contracting

officers by EBB and EMS.

7. Contract out the telecommunication services.

3

8. Test on three procurements (hardware, service and research and

development).

9. Establish telecommunication service nets during the draft RFP stage

(with an observer/evaluator net set up).

10. Involve Competition Advocate General (CAG), Judge Advocate General

(JAG), Information Systems Command (ISC) and industrial associations in

evaluations.

Mr. Vorhies suggests that these telecommunication services be tested as

an alternative to pre- and post-solicitation bidders conference and formal

correspondence techniques used in complex procurements.

B. STUDY OBJECTIVE.

The objective of this study is to determine the feasibility and usefulness

of employing EBB, EMS and on-line terminal conferencing in the initial

procurement process and to make recommendations on possible future

hardware/software testing.

C. STUDY APPROACH.

This study addressed the feasibility and usefulness of using these

telecommunication services in the initial procurement phase. To answer these

questions it first had to be determined if these telecommunication services

could be provided to the U.S. Army by private contractors (companies

providing these types of services) or with in-house DOD resources.

The next step in the study was to survey government contractors as to the

usefulness and acceptability of these services. The present operating

procedures of solicitations, proposals and evaluations for RFPs were examined

to determine which areas are best suited for these services and which areas

4

have "shortcomings" that can be corrected by these telecommunication services.

After these actions were accomplished, the proposed uses and limitations of

these electronic communication services were evaluated.

Present and planned electronic procurement "communication" systems were

studied to determine their developmental processes and to evaluate their

acceptability at both the government users and the contractor users levels.

The final step of the study was to evaluate the feasibility of developing

and employing these telecommunication services within the initial procurement

phase.

The study team consisted of one operations research (OR) analyst from the

Army Procurement Research Office (APRO) and two procurement analysts, one each

from Army Materiel Command (AMC) and the Corps of Engineers (COE).

D. ORGANIZATION.

This report is divided into six chapters. Chapter I gives the

introduction and background of the study. It also provides study objectives

and the approach taken. Chapter II presents an overview of the present

procedures used in formal procurement actions and explores areas or steps

where electronic communication services would be beneficial. Chapter III

examines some of the current (and upcoming) automated electronic communication

processes used in procurement. Chapter IV is an analysis of Mr. Vorhies'

suggestion and issues surrounding the implementation and use of the electronic

telecommunication services within the contracting arena. Chapter V is a

discussion of the four different alternative ways to update the current

procurement system and ensure that it continues to meet its growing workload.

The conclusions, recommendations and implementation procedures are presented

in Chapter VI.

5

CHAPTER II

DEVELOPMENT OF SCOPE

A. OVERVIEW.

Currently at most contracting offices throughout the U.S. Army the

initial procurement phase is accomplished by a manual process. Most or all

correspondence is accomplished by mailing (U.S. Postal Service) the hard copy

of each correspondence to the contractors and waiting for the same process to

receive the replies. This process is standard procedure in most contracting

offices and is one area in which many believe time could be saved and the

communication process improved. This slow process also has a tendency to

inhibit the flow of information between the buyer and the supplier. If the

communication process between buyer and supplier could be made faster and more

open to accommodate the number of procurement actions processed each year,

many efficiencies could be gained.

B. CURRENT PROCUREMENT PROCEDURES.

With the larger, more detailed buys, the process generally can be broken

down into the following actions with the offices handling them.

OFFICE ACTION

Contracting Office Develop RFP

Contracting Office Prepare synopsis

Contracting Office Publish synopsis

Contractor Read synopsis

Contractor Request RFP

Contracting Office Send RFP to potential offerors

Contractor Read RFP

Contractor Ask questions

6

Contracting Office Staff questions

Contracting Officer's Team Research questions and prepare answers

Contracting Office Answer questions to contractor

Contracting Office Issues amendments

Contractor Prepare proposals

Contractor Forward proposals to Contracting Office

Contracting Office Contact/call together evaluation team

Evaluation team Examine proposal and evaluate how well itmeets requirements of RFP/solicitation

Evaluation team Request clarifications

Contracting Office Discuss clarifications and deficiencieswith evaluation team

Contracting Office Issue clarifications to correspondingcontractor(s)

Contractor Respond to clarifications/deficiencies

Contracting Office Conduct discussions with individualcontractor(s)

Contracting Office Discuss offers with evaluation team

Contracting Office Request best and final offers fromqualifying contractor

Contractor Submit best and final offers

Contracting Office Evaluate best and final offers

Contracting Office Notify Army officials of winner

Contracting Office Award contract

Contracting Office Notify all participating contractors ofwinner

This list is not intended to be an all-inclusive list of each small detail

of the actions required during the procurement process - just a listing of the

more important areas so as to give an indication where time could be saved.

All of the steps or actions are an integral part of the procurement process

7

and help ensure that the customers get what they need at the time it is

needed. The use of electronic telecommunication services should start with

the draft RFP stage and conLinue until product delivery.

Within most of these current steps or actions there are periods of time

that the contractor or contracting office has to wait for correspondence to be

delivered. If these periods of "waiting" time could be eliminated or just

reduced, it would greatly enhance the procurement process and make it more

responsive to the customers' needs. Reducing the waiting time would help

ensure real time responses to questions/problems in the procurement arena and

increase the flow of information, questions, and answers between the

government and the contractors.

Many people feel that most of these areas hold potential for time savings.

The amount of time saving will vary between each action. Presently, some

actions (sending RFPs, sending contractors' proposals and submitting best and

final offers) may be too expensive or beyond current capabilities to

accomplish, but should be possible as electronic communication technology

grows. Areas where much time is spent waiting for replies and other types of

information tend to offer the most potential for time savings and increase the

flow of information between buyer and seller.

C. SUMMARY.

This list of actions and offices provides an indication of the many

steps/actions within the complete procurement process where much time could be

saved. It also shows where communication could be made more open - meaning

better understanding between the Government and the contractors, better RFPs

and contractor proposals, and ultimately better end products to the soldiers.

8

CHAPTER III

DISCUSSION OF CURRENT ELECTRONIC COMMUNICATIONPROCESSES AND AUTOMATED CONTRACTING APPLICATIONS

A. INTRODUCTION.

During the past few years many "automated procurement systems" have been

developed and implemented within today's Army contracting arena. Most of these

new systems use some type of electronic communication procedures to transmit

and receive requests for issues or buys and provide a complete audit trail on

all transactions that take place. These new automated systems have increased

efficiency and customer satisfaction in most areas in which they have been

used.

There are also some automated systems that are still in the developmental

stage and as of yet are unproven within the actual contracting or logistics

day-to-day operations. These systems, both now in use and in the

developmental stage, indicate that there is an acceptance of these types of

automated electronic communications systems both on the government side and

the contractor side of doing business.

B. SYSTEMS PRESENTLY IN USE.

A sampling of the automated systems presently in use include the

following:

1. Paperless Ordering Placement System (POPS).

POPS is an electronic interface between the Defense GeneralSupply Center and commercial industry which enables theSupply Center to fill customer requisitions for commercialtype items quickly and efficiently directly from vendormaintained inventories. This is in contrast with thetraditional logistic system which requires large periodicprocurement of inventories for storage at defense depots andthe subsequent filling of customer requisitions from thosestocks. Under POPS the vendor assumes the responsibilityfor inventory maintenance storage, shipping and handling.Savings from reduced inventory investment, seconddestination transportation costs and handling by DLA depotsare passed on to the customer in the form of reducedstandard unit price. By utilizing a computer to computer

9

connection and a single annual contracting instrument withthe vendor, the Supply Center has improved performance interms of delivery time and customer support while reducingthe cost of operations substantially. [2]

2. Procurement by Data-Link Quotation System (PDQ).

PDQ is an attempt at expanding the POPS concept to allowthe government (DGSC) to interface with smaller commercialorganizations that do not possess a lot of systems expertiseor systems resources, but who none the less support ourprocurement initiative by providing us a variety of FederalSupply Class items and manufacturers' parts. PDQ is able tosupport this simplified interface by providing asynchronouscommunications that require no vendor conversion program andwhich requires the contractor to possess a minimal amount ofhardware, (i.e., a microcomputer, modem, and printer), andsystems knowledge. Phase 1 of the PDQ project has beenon-line since April of 1985, and it involves electronicallyissuing SASPS I BPA calls, as well as electronicallyreceiving and posting vendor responses to these calls. Thesecond phase of PDQ involves the electronic receipt andposting to SAMMS of SASPS II RFQ quotation data. Phase 3 ofthe project requires the development of an electronicbulletin board for the distribution of SASPS II RFQinformation. And lastly, the fourth phase of PDQ calls forthe development of a system to handle and process electronicinvoices so as to promote a more efficient and timely meansof processing this information through the Accounting andFinance office.[3]

3. Commerce Business Daily (CBD) on Electronic Bulletin Board. Presently

eight different electronic telecommunication companies provide the CBD on an

Electronic Bulletin Board [4]. The first company started the EBB service of

the CBD in September 1982 and the use of the service has continued to grow at

a very fast rate. The revenue to the Department of Commerce (DOC) has grown

from zero in 1982 to over $500,000 in 1986. This money is paid to the DOC by

companies providing this service to government contractors.

C. SYSTEMS IN THE DEVELOPMENTAL STAGE.

A sampling of the automated systems now in the developmental stage include

the following:

10

I. Computer Aided Logistics Support (CALS).

The CALS idea, basically, is to permit transfer of technicaldata to industry from DoD, among DoD subsets and betweencompanies. It will be a kind of perpetual open line totransfer in real time the kind of data presently publishedin "Tech" manuals."Tech data" includes a wide range of information, e.g.parts lists, maintenance data, military specifications,nomenclatures, etc. Just to move all that data around on acomputer/communications network raises all kinds ofproblems: security of data transmission, individual companyrights-in-data, Freedom of Information Act incursions,need-to-know, etc.

The principal DoD objectives for CALS are justifiableenough: influencing weapon systems design to producesystems that are more reliable, easier to support andmaintain; real-time distribution of logistics supportproduct delivery, maintenance; reducing technical datapaperwork needed to develop, acquire, support and maintainmilitary weapon systems; more efficient procurement ofspare parts; and, throughout it all, reducing logisticssupport costs through a large, up-front investment,probably, in software, mainly.[5]

2. Standard Army Automated Contracting System (SAACONS).

SAACONS is a microcomputer based system using enhancedcommercial type software designed to support Armyinstallation contracting offices. It will significantlyincrease productivity and efficiency in operations byautomating the entire spectrum of contracting functions,contract document processing, preparation of purchaseorders, tracking all contractual actions and preparingmanagement reports. This total ADP package will reduceprocurement administrative lead-time, contracting backlogsand the use of extensive overtime while increasing qualityof controls and contract administration.[6]

3. Integrated Procurement System (IPS).

IPS is an automated information system being designed anddeveloped by the Army Materiel Command (AMC) for itscommodity major subordinate commands (MSCs). Its goal is toimprove the efficiency of Army Procurement at the wholesalelevel by automating the procurement process, thus reducingadministrative lead time and procurement backlog.[7]

11

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D. SUMMARY.

In addition to these Army systems there are many Air Force, Navy and DOD

systems both in actual use and in the developmental stage. As with the Army

systems these systems have proven beneficial in the operation of each office

that uses them and also to the customers supported. The next few years could

see these systems refined to such a point that many of the procurement

processes could become completely paperless.

12

15

CHAPTER IV

ANALYSIS OF CONCEPT

A. INTRODUCTION.

This study focuses on the feasibility of using EBB, EMS and on-line

terminal conferencing as a means of upgrading (making it faster and more open)

the flow of information between the Government and its contractors. This

chapter examines the main ideas taken from Mr. Vorhies' suggestion.

Additionally, it analyzes possible outcomes (both negative and positive) of

using electronic telecommunication in U.S. Army procurement actions.

B. CONCEPT OF SUGGESTION.

Mr. Vorhies' suggestion can be broken down into three main areas. The

first area is the use of the EBB to post or advertise (just as the CBD now

does, except electronically) the items or services that the Army is interested

in procuring. This will allow all interested parties to access the EBB in

real-time and find areas in which they might be interested in bidding on. The

next area is to electronically connect contractors and contracting offices by

means of an EMS and allow the contractor to send an electronic message to the

contracting office requesting the RFP. This EMS would hp 4'aractive and

allow questions and answers to pass between the contr s and the

contracting office. The third area would be private ot I terminal

conferencing among Army procurement players to allow them to keep better

informed of ongoing procurement actions. This service would be limited to

interested Army procurement players and eihable them to communicate in real

time instead of after-the-fact.

C. ANALYSIS OF SUGGESTION.

1. Establish an EBB to allow equal and faster access to contractual

information for all potential contractors.

13

The use of the CBD on EBBs is presently being accomplished by no less

than eight different companies. The first company began providing this

service in September 1982 and reports that each year more and more

corporations sign up to use this electronic service and that revenues continue

to increase. This continued increase in use by more and more corporations

indicates an acceptance to use the EBB and an unwillingness to wait for the

hard copy CBD to find potential jobs (contracts). The cost of using the CBD

on the EBB is approximately $60 per hour of connect time and a one-time cost

(approximately $25) for a password. Presently contractors must pay $243 per

year for the hard copy CBD. The Department of Commerce is paid revenues, for

providing the CBD to each company, each time a contractor logs on and uses the

services to look for potential contracting jobs.

2. Establish EMS between the bidders (contractors) and contracting

offices to allow faster two-way communications.

The use of EMS between the contractors and the Government would

greatly enhance the flow of information by reducing the waiting time for

regular mail service. It is not uncommon for contractors to make special

trips to contracting offices (or use special one day mail services like

Federal Express) to decrease the waiting time for answers to questions or for

the initial RFP. This general unwillingness to wait for replies and instead

make an extra effort (and sometimes pay more) indicates an interest in a

faster means of communication. The EMS can allow the user to make information

immediately available to an individual, or a group within a single location,

across the nation or around the world. Presently many different commercial

companies provide this service to private industry to i-icrease their

communication efficiency and allow them to have virtually instantaneous

contact with other company offices or ci-tomer offices.

14

3. Establish private on-line terminal conferencing among Army procurement

players to keep them better informed of ongoing procurement actions.

The implementation and use of private on-line terminal conferencing

could enhance the information flow between Army procurement people. This

electronic service allows the user to use his terminal and interactively

communicate with as many subscribers as he wants. By using this service, the

users can hold meetings, discuss problems or upcoming issues and send

information or draft RFP, etc. to interested parties. Many Army offices

today use Local Area Networks (LAN) to pass and discuss information between

interested parties. Presently the U.S. Army Forum Office (DACS-DMF) operates

a computer teleconferencing system with over 1200 participants on 39 different

subnets.[8] The Army Forum office uses these nets to enhance the way the Army

shares information. This system uses both in-house (DDN) and commercial

resources.

4. Provide the RFP in summary or full text to potential contractors by

EBB and EMS.

This area should be expanded to say - summary or full text RFPs ard

full text contractor proposals (CP). The summary RFPs are already being

provided to the potential contractors by the EBB by the eight electronic

communication companies mentioned above. The important question becomes

should we expect to be able to send full text RFPs and full text CPs with the

* large number of pages, technical data, drawings and color pictures?

Admittedly, some full text RFPs and CPs could and should be sent

electronically because of their small size, etc., but generally this will be

the exception rather than the rule. At present it is cost prohibitive to send

all full text RFPs and CPs electronically because of their size and special

data, but at some point in the future with the new developments this

capability should become a reality.

15

5. Provide pre-bid information to potential contractors and allow

questions and answers between contractors and contracting offices by EBB and

EMS.

The use of the EBB and EMS to provide information to all concerned

contractors would greatly speed up the process of questions and answers on

draft and final RFPs. The use of the EMS to facilitate the questions and

answers could eliminate the need for pre-bid conferences. This in itself

could be a big cost savings. After the contractors received the RFP they

would ask questions using the EMS. After all questions are received from the

contractors (at a certain cut off time) the questions would be staffed and

answers prepared. These answers and clarifications/amendment would then be

sent out electronically to each participating contractor's mailbox. This

would eliminate all the time that is normally used in mailing hard copy

questions and answers. It would eliminate the need for contractors to attend

pre-bid conferences and bring experts in each area with them to the

conference. It would not eliminate any time used in staffing, researching,

and drafting answers to each question.

D. ANALYSIS OF ISSUES.

1. Technological. Presently the technology exists to implement these

telecommunication services within the U.S. Army Contracting offices. The

present technology will allow authorized users (contractors with authorized

passwords) anywhere to access an EBB and look at areas of interest to their

company. It will also allow questions/answers/etc. regarding the RFP or

proposals to be sent by EMS between interested companies and the contracting

office. Presently because of cost and technical data, etc., it is not

feasible to send full text RFPs and proposals by EMS. The on-line terminal

conferencing for Army procurement players can also be accomplished with

present day technology.

16

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2. Contractual/Legal. Initially using these services will have no effect

on the legal aspects of contracting because during the first stage there will

always be hard copy of proposals and signed contracts. After these services

have become the accepted process and all communication is done by this

process, there will be a need to accept electronic signatures and use all

electronic communications just as hard copy communications are used today. At

some point there will have to be an adjustment to the contracting regulations

to accommodate these changes.

3. Managerial. The management of an electronic communication system

should be close to the same as the management of the present day system. Just

as the mail is checked daily now - the electronic mail will be checked daily

once this system is implemented. Questions will be researched, answers typed

on the system, and sent to each interested contractor. Training should be

minimal because most offices presently have some automated equipment on hand

and trained people to use it. The main training requirement will be on the

use of the EMS. The managerial problems that could arise will come because of

the resistance to change that most people possess. This resistance to change

could cause some problems during the transition phase in that people do not

like to change the way "it has always been done".

4. Security. The electronic communication system can provide the same

amount of security as does the present system. With these communication

systems using passwords and multi-level passwords there should be no problem

with unauthorized users. Regular users will be assigned a password and will

most likely sign on at a certain location and time daily to receive their

mail. Passwords can be changed as often as necessary. There are also

networks in operation today that can handle classified material that must be

17

--. '.R

sent to contractors. The commercial company providing the electronic mail

service will act as the system administrator and ensure that only authorized

users are allowed on the system.

5. Economic. Most of the large companies and large contracting offices

that are involved in the larger acquisitions already have the equipment and

resources available to employ these telecommunication services. The expense

will be at the smaller contracting offices and small business offices that do

not have the equipment to use the services. Each office (Government and

contractor) must have a PC with storage device and a printer, communication

software, a modem and access to a phone line. This should be an initial

investment of approximately $3,000 for the small businesses. This initial

investment should be able to be recovered by using this equipment for more

than just electronic communications. The businesses and Government offices

that are required to purchase this equipment will be able to use this

microcomputer system for other office operations and substantially reduce the

impact of the initial investment. Most Government procurement offices

presently have or are implementing automated systems 'hat require these same

types of equipment. Most of these system costs will be borne by other systems

already in use or in the planning stage.

Even though the use of the electronic communication services will

initially be somewhat more expensive to both the government and the

contractors, there are many areas in which it will save both time and money.

This service will reduce the amount of money spent on blank forms, postage,

travel and printing replies, etc. to send to each of the contractors. The

main advantages of this service are the savings in time and the more open

communication chain that will be established. These are both intangible

savings/benefits which will result and skould not be overlooked.

18

E. EFFECTS ON SMALL BUSINESS.

The most negative effect of using these electronic communication services

would fall on the small businesses. Many times the smaller firms or

subcontractors do not have the required hardware to take advantage of this

type of service and may not want to make the initial investment to purchase

the required equipment. This problem would have to be handled by setting some

cut off date in the future that would require all businesses that want to do

business with the U.S. Government to have the required equipment. A

precedence for this was set in the 60s when the government required bar coding

to be used by all contractors doing business with the U.S. Government.

During the interim both electronic communications and hard copies would

have to be used. This strain would be lessened if this electronic system were

implemented in stages and used only on large contracts (and used only with

prime contractors) during the initial stages of implementation.

In talking with DA, AMC, end TRADOC Small and Disadvantaged Business

Utilization offices, it was agreed that not even small business can afford to

stay out of the electronic communication business but it is difficult to

determine how long it should be before all businesses should be required to

have the capability.

F. SUMMARY.

The concept of using the EBB, EMS and private on-line terminal

conferencing within the initial procurement process is feasible with today's

electronic telecommunication technology. There are many Army offices and

private companies presently using some of these services. The use of these

services will reduce the time spent on each procurement action and allow that

time to be better used in other stages of development. These three electronic

telecommunication services could be the initial base of the completely

electronic paperless procurement system of the future.

19

CHAPTER V

ALTERNATIVES

A. INTRODUCTION.

In August 1982, the Assistant Secretary of the Army (Research,

Development, and Acquisition) tasked the DA Acquisition Management Review

Agency (AMRA) to conduct an assessment of current ADP capabilities at

contracting activities.[6]

In December 1984, the Conference Committee tasked the Department of

Defense (DOD) to provide a plan that improves substantially the computer

capability of the Military Departments and the Defense Logistics Agency to

store and access rapidly the data that is needed for the efficient procurement

of supplies. Congress has attributed many of the problems associated with

spare parts management to the lack of modern systems and has required similar

reports on efforts to modernize other logistics support systems.[9]

These are examples of the many initiatives that the DOD and DA have

undertaken to ensure that the procurement system continues to take advantage

of present day technology. These initiatives were developed to guide the

automation efforts of the acquisition agencies and to provide a plan for the

use of automated procedures within procurement.

With the myriad of electronic telecommunication services available

through both the DOD and commercial companies, the decision about what

services and which resources should be used would be a difficult one. This

decision is only compounded when hardware and software constraints are

considered. For this reason, different alternatives for testing the concept

feasibility must be looked at and evaluated. These alternatives for testing

may not necessarily be the same alternatives that will be identified during a

formal economic analysis if a decision is made to implement these services.

20

B. ALTERNATIVES.

There are four possible alternatives: Alternative I, status quo; Alternative

I, use all in-house (DOD) resources; Alternative I1, use all commercial

(private companies) resources; and Alternative IV, use part in-house and part

commercial resources. All of these alternatives can satisfy the requirement -

at present. The important issue is which alternative is most able to satisfy

the growing requirements and is the least disruptive to the present system

while preparing for the future of automated procurement processes.

1. Alternative I (status quo). This alternative is the existing standard

operating procedure as is now used in the procurement arena. With the

increasing number of contracts let annually and the increases in dollars spent

each year, it is apparent that something needs to be done to ensure tht each

procurement action receives proper attention and is completed in a timely

manner. Any time saved in the process could be used in other procurement

actions. This alternative is presently satisfying the requirement but is

becoming increasingly cumbersome. The point that needs to be made is - will

it continue to satisfy the increasing requirements in the future without

continually increasing backlog and/or the manpower/overtime resources?

2. Alternative II rUse All In-House (DOD) Resourcesl. This alternative

is to implement the electronic telecommunication services within contracting

and to use only DOD resources. Presently the Defense Data Network (DDN) has

capabilities to provide both EBB and EMS to its users. With present resources

(manpower and equipment) these services are very limited. To provide all of

these services to the procurement community it would be necessary to add both

personnel and equipment to meet the increased demand. This alternative would

'2

~21

use presently available Government resources (and develop additional in-house

capabilities) to provide the EBB, EMS and on-line terminal conferencing to the

procurement community.

3. Alternative III [Use All Commercial (private companies) resourcesl.

This alternative is to implement these services within contracting and use

only resources of a private company (or companies) to provide these services.

This alternative does not take advantage of all in-house resources that are

presently in place and providing good service to the Army community. This

alternative would use all commercial companies to provide the EBB, EMS and

on-line terminal conferencing to the procurement community. No in-house (DOD)

resources would be used to provide these electronic communication services.

4. Alternative IV (Use Part In-House and Part Commercial Resources).

* This alternative is to use resources now in place in-house (DOD) and contract

for commercial companies to provide the other services as required. This

would take full advantage of present in-house resources without overburdening

the present system. It would also use private electronic communication

companies to provide expertise, system maintenance and system management

responsibilities over the bulk of the services. This alternative would use

DOD resources to provide the on-line terminal conferencing to the Army

procurement players. The commercial EBBs presently in use would continue to

be used and the EMS would be developed and provided to the procurement

community by ce'mercial companies using their expertise and experience.

C. ANALYSIS.

Of the four alternatives, number four takes the most advantage of present

in-hous,- and commercial resources. This alternative would take the least time

and developr -nt to implement. It is possible to use the electronic CBD on the

EBBs at present to satisfy the first nrt of the suggestion. There are no

22

. I , ! . . . .. . . .. . . .. ... T.. . .. . . . .. .

advantages to creating an in-house EBB to publish the RFP synopsis/summary and

not only does this EBB system not cost the government any money, but is paying

the Department of Commerce over $500,000 per year.

The next area is the use of EMS for communication between contractors and

contracting offices. This is an area that will have to be developed either

in-house or commercially. This service is the most important one because it

will handle the bulk of all communications and will take the most resources.

Currently the in-house resources are not adequate to satisfy this requirement

of manpower and equipment limitations. Commercial electronic communication

companies have the expertise, equipment, and experience required to provide

this service to the U.S. Army.

The last area is the use of private on-line teleconferencing among Army

Procurement players. In-house resources are adequate to provide this service

to the contracting community. Adding this service to the in-house systems

would not be expected to require any additional resources.

All four alternatives can presently satisfy the requirements within

procurement. Alternative I does not take into consideration the ever

increasing workload or the technological advances made in electronic

communication. The other alternatives will both satisfy the workload of today

and prepare for the increasing workload of the future.

Because alternative four takes the most advantage of present operating

communication systems, it is the one that should be used to test the

feasibility of these electronic telecommunication services within the

procurement process. Using the EBB already in operation and the on-line

terminal conferencing offered by DOD resources leaves only the development of

the EMS prior to the actual test.

23

-

iA

D. TESTING.

Before a final decision is made to implement procedures to use electronic

communication services within the procurement process it is imperative that

these procedures be tested on actual procurements. The test should consist of

sufficiently complicated and involved buys where there are areas that

considerable "waiting time" could be saved. The test should include at least

three different procurements, one in each of the following areas: (1)

hardware, (2) service, and (3) research and development and start at the draft

RFP stage.

The actual test should be conducted by one of the more "automated" buying

commands within AMC that will have the three types of buys pending. This will

help ensure that equipment, personnel and training expenses are kept to a

minimum because these commands already have many automated processes and

experienced computer/word processing personnel on hand.

The Competition Advocate General's Office (CAG) and the industries

involved in the test should evaluate the process as to its usefulness and

provide lessons learned.

The test should take full advantage of all current in-house and commercial

operations that will support these telecommunication services. The current

operations that will support these services are:

1. The CBD on the EBB provided by eight different commercial companies.

2. The Defense Data Network that provides different areas of telecommuni-

cation services to Army players.

24

CHAPTER VI

CONCLUSIONS, RECOMMENDATIONS AND IMPLEMENTATION PROCEDURES

A. INTRODUCTION.

The use of present day electronic telecommunication services today can be

compared to the use of the telephone years ago. It is a means of gaining

better and faster access to expertise while allowing the user to work closely

with distance associates. It also allows the user to spend less time and

money on travel without having to wait for hard copy information. This faster

means of sending and receiving bulk information is an area that should not be

overlooked in the contracting arena.

B. STUDY CONCLUSIONS.

1. The electronic telecommunication suggestion for contracting is

feasible and should be considered for adoption. While a complete economic

analysis cannot be done at this time, evidence supports the feasibility of

such an effort.

The electronic telecommunication services presently available and the

technological advances that are taking place daily in this field make it very

important to test their use within Army contracting. These services are at an

advanced enough stage to provide the fast, efficient communication between the

U.S. Army contracting offices and the government contractors that is needed.

The use of these communication services within today's procurement process is

feasible and they should be tested for their applicability to the total

procurement process.

The implementation and use of these electronic communication services may

be the building block on which the completely paperless contracting system of

the future is developed.

25

There is a need to reduce the amount of waiting time spent on each action.

This would in turn reduce the amount of time spent on each procurement and put

the end product in the customer's hand faster. There is also a procurement

need to have more open, two-way communications between the suppliers and the

government. These needs are based on the ever increasing procurement workload

and the increasing time it takes to get a finished product to the customer.

2. The alternative of using part in-house and part commercial resources

(number 4) to provide these services shows the most promise for the Army

application. This alternative takes full advantage of already developed and

operating procedures. This should save both development time and cost.

3. The U.S. Army should consider developing a prototype and testing it.

C. RECOMMENDATIONS AND IMPLEMENTATION PROCEDURES.

It is recommended that Mr. Vorhies' concept be tested for use within the

initial procurement process.

Actual testing of these telecommunication services, using both in-house

and commercial resources, must be conducted by an organization that has the

required equipment and is experienced in its use. This will ensure that costs

are kept to a minimum and that full advantage is taken of trained,

experienced, contracting personnel.

The test should start with the development of the draft RFP and continue

until the contract is awarded. It should include at least three "involved"

procurements, one in each of the following areas: (1) hardware (2) service,

and (3) research and development.

The test should use presently operating commercial and in-house

telecommunication resources to keep the development time and cost to a

minimum.

26

These electronic telecommunication services need to be broken down into

three areas. The first is the use of the present EBBs to provide the CBD to

all contractors. The next area is the use of the commercial EMS to provide

fast two way communications between the government and its contractor. The

last area is the use of DOD operated on-line terminal conferencing for Army

procurement players.

D. SUMMARY.

The use of electronic telecommunication services is a means of upgrading

the procurement system with present day technology. These services have the

capabilities to increase the efficiency of each contracting office and speed

the flow of information - thereby providing better products in a shorter time.

This is an area that should neither be overlooked nor put off until "people

are ready to accept it."

2

Vs,

27

REFERENCES

1. Vorhies, H. W. Competitive Procurement and Electronic Bulletin Boards,E-Systems Inc., June 1986.

2. POPS Briefing, 12 March 1987, furnished to Army Procurement Research

Office (APRO) by R. Wallace, Defense General Supply Center (DGSC).

3. PDQ Briefing, 12 March 1987, furnished to APRO by R. Hall, DGSC.

4. Commerce Business Daily, U.S. Government Printing Office, March 23, 1987.

5. National Security Industrial Association, "The Major Issues NSIA Sees in1987", Government Executive, March 1987, pages 20-23.

6. Standard Army Automated Contracting System (SAACONS) FunctionalDescription, I December 1984.

7. Integrated Procurement System Briefing, undated, furnished to APRO by U.S.Army Materiel Command.

8. U.S. Army Forum Office Briefing, undated, furnished to APRO by M. R.George, U.S. Army Forum Office.

9. Memorandum, 7 December 1984, subject: Automated Logistics ManagementSystems Plan, from R. W. Daniel, Jr., Deputy Assistant Secretary of Defense(Logistics and Materiel Management).

2

28

STUDY TEAM COMPOSITION

Captain Johnathan W. Painter, Project Officer, has been an OperationsResearch Analyst with the Army Procurement Research Office since 1985. Priorto his current assignment he held various logistics positions with the BerlinBrigade and the 82nd Airborne Division. He is a 1974 graduate of NorthCarolina State University and is currently pursuing a Master's Degree inLogistics Management. He is a 1985 graduate of the Operations ResearchSystems Analyst Military Applications Course.

Mike Thompson has been a Procurement Analyst with Army Materiel Commandsince 1986. Prior to his current assignment he was a Contract Specialist withU.S. Army Armament Munition and Chemical Command. He is a 1981 graduate ofSt. Ambrose University and a 1985 graduate of the Advanced ProcurementCourse.

Kirk D. Williams has been a Contract Specialist with the Corps ofEngineers since 1986. Prior to his current assignment he held numerouscontracting assignments with the U.S. Air Force, both while on active dutyand as a civil service employee.

29

14

UnclassifiedSECURITY CLASSIFICATION OF THIS PAGE (WThen Det. Entered)

REPORT DOCUMENTATION PAGE READ INSTRUCTIONSBEFORE COMPLETING FORM

1. REPORT NUMBER 2. GOVT ACCESSION NO. 3. RECIPIENT'S CATALOG NUMBER

APRO 87-06 14. TITLE (and Subtitle) 5. TYPE OF REPORT & PERIOD COVERED

Electronic Bulletin Boards for Contracting Final

6. PERFORMING ORG. REPORT NUMBER

7. AUTHOR(e) 8. CONTRACT OR GRANT NUMBER(e)

Captain Johnathan W. Painter

9. PERFORMING ORGANIZATION NAME AND ADDRESS 10. PROGRAM ELEMENT. PROJECT, TASKAREA & WORK UNIT NUMBERS

Army Procurement Research OfficeATTN: SARD-KPRFort Lee, VA 23801-6045

II. CONTROLLING OFFICE NAME AND ADDRESS 12. REPORT DATE

Director, Competition Advocate General June 1987

ATTN: SARD-CA, The Pentagon, Room 2E532 13. NUMBER OF PAGES

Washington, DC 20310-0103 3414. MONITORING AGENCY NAME & ADDRESS(If different from Controlllng Office) 15. SECURITY CLASS. (of this report)

Unclassified1Sa. DECL ASSI FICATION/ DOWNGRADING

SCHEDULE

16. DISTRIBUTION STATEMENT (of thie Report)

Unlimited

* 17. DISTRIBUTION STATEMENT (of the obetracf entered In Block 20, If different from Report)

IS. SUPPLEMENTARY NOTES

19. KEY WORDS (Continue on reverse eld* If neceeery end identify by block number)

procurement Electronic Mail Service

ta lecommunicat ioncommunication servicesElectronic Bulletin BoardsTerminal Conferencing

20. ABSTRACT (ntfinue am reverse eob If nacmary ind Identify by block number)?- Timely, free flow of information between buyer and seller has historically

been a problem in government procurement actions. Since there is a requirement

to make information available to an individual, a group within a single location

or a group across the nation, in a timely manner, it is very important that the

government consider taking advantage of the latest communication technology.

Present day communication technology will allow the user to gain better and

faster access to expertise and work closely with distant associates while

spending less time and money on travel.- (Continued)

D IAFORM7 1473 EDITION OF I NOV 6S5 SOBSOLETE SCI CLUnclassifiedSECURITY CLASSIICATtOW OF THIS PAGE (Whepn Data Entered)

UnclassifiedSECURITY CLASSIFICATION OF THIS PAGE(When Data Entered)

In a recent Army Competition Conference (26 June 1986), the need for

incorporating present day communication technology into the procurement process

was highlighted. One of the panel members (Mr. Vorhies of E-Systems, Inc.)

presented a paper suggesting the use of electronic bulletin boards (EBB),

electronic mail service (EMS) and on-line terminal conferencing as a means of

upgrading the flow of information between the Government and the contractors.

Unclassified

SECURITY CLASSIFICATION OF THIS PAGE(Wl"en Date Entered)

F- w

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